KUALA LUMPUR (April 15): Emas Kiara Industries Bhd is proposing to acquire property development company, Cocoa Valley Development Sdn Bhd (CV Development), for RM76 million.

In its filing to Bursa Malaysia today, Emas Kiara said it has entered into a conditional share sale agreement with Kim Feng Capital Sdn Bhd (KF Capital) for the proposed acquisition of 400,000 shares, representing the entire equity interest in CV Development.

CV Development is a wholly-owned subsidiary of KF Capital, which in turn holds 47% equity interest in Emas Kiara as at April 13, 2016.

The RM76 million consideration is to be satisfied via the issuance of about 65.5 million new Emas Kiara shares at an issue price of RM1.16 per consideration share.

On March 25, CV Development had entered into a conditional development rights agreement with Cocoa Valley Sdn Bhd for the acquisition of the development rights to two parcels of adjoining leasehold land in Kota Tinggi, Johor Bahru. The market value of the development rights to be held by CV Development is RM260 million.

CV Development is acquiring the development rights instead of the land, due to a Bumiputera ownership condition imposed by the the director of Land and Mines of Johor on the company holding the land.

The directors of CV Development are Cindi Sim, Simon Sim and Ng Liang Khiang. Cindi and Simon are both also directors in KF Capital.

Emas Kiara currently only has an on-going residential development project in Johor Bahru known as ‘Pinnacle Tower’ with an estimated gross development value  of approximately RM265 million, which is expected to be completed in June 2017.

Hence, the company believes the acquisition will scale up its property development business, as it provides the group with development rights to about 461 acres of landbank located in Kota Tinggi, as compared to its current land bank size of approximately four acres.

The proposed project is a mixed development comprising amongst others, detached, semidetached and terraced houses and affordable homes, as well as commercial and shop office lots, with an estimated gross development value of about RM2 billion, to be realised over a development period of 7 years, which in turn will enhance the group’s future financial performance.

The development is estimated to be approximately RM1.5 billion, which will be funded through internally-generated funds, as well as proceeds from sales of properties within the development and/or bank borrowings.

Emas Kiara shares were suspended from trading today. It last traded yesterday (April 15) at RM1.38, for a market capitalisation of RM113.9 million.